Earnings Labs

Globalstar, Inc. (GSAT)

Q3 2016 Earnings Call· Thu, Nov 3, 2016

$81.31

-0.72%

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Transcript

Operator

Operator

Welcome to the Globalstar, Inc. Third Quarter 2016 Earnings Conference Call. My name is Danielle and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer. Please note that this conference is being recorded. And I will now turn the call over to Jay Monroe, Chairman and CEO. Mr. Monroe, you may begin.

Jay Monroe

Analyst

Good afternoon and thank for joining us to discuss third quarter 2016 results. Following my operational update, Rebecca will provide an overview of the third quarter financial results, followed by a Q&A. Tim will not be able to join us for this portion of the call given ongoing FCC activity in D.C. this week, which I will elaborate on momentarily. But first, please note that today's earning call contains forward-looking statements and tended to fall within the Safe Harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the forward-looking statement section of Globalstar's SEC filings and in today's press release. This release, which is available on our website, also includes a reconciliation of the non-GAAP financial measure, adjusted EBITDA, to net income, the most comparable financial measure calculated under GAAP. At the outset of today's call, I'd like to provide an update on the FCC proceeding. As most of you fully understand and appreciate, a successful approval remains our number one priority and together with our team of advisors, we are unrelentingly focused on this process daily. Recently, we submitted a full-term Ex Parte, responding to the latest interference report filed by Microsoft in September. I encourage everyone to read our technical report carefully. It fully details the flawed methodology used which renders Microsoft's conclusions completely unreliable. As explained in our response, the opposition's methodology included an extreme test set up and technical parameters that would never occur in any real-world deployment. On the contrary, when interference testing is conducted using accurate real-world assumptions as we did and we submitted on our Ex Parte and has been confirmed in multiple tests and various environments in the past which are also on the record, it is conclusive that TLPS peacefully coexist with…

Rebecca Clary

Analyst

Thank you, Jay, and good afternoon, everyone. As Jay mentioned, we are pleased to report another consecutive quarter of strong revenue growth. Total revenue which increased 8% over the third quarter of 2015 was driven by increases in both subscriber base and ARPU. Total service revenue also increased significantly, up 12% from the third quarter of 2015 resulting primarily from growth in SPOT and Duplex service revenue. 90% of the increase in Duplex service revenue is driven by ARPU which was up 22% from the third quarter of 2015, due to increased revenue from prepaid usage base contracts. Our higher price usage base plans are more valuable to the customer as they provide additional flexibility and also are generally required in order to purchase equipment under our current sales permission. The popularity of these plans have increased suddenly since 2014, resulting in more seasonality in our recognized revenue as usage and activations generally peak during the second and third quarters. Price increases for many of our legacy rate plans also contributed to the $7 increase in ARPU. We adjusted certain rate plans after evaluating our service offerings to make sure they were priced appropriately, relative to the market plans offer by our competitors our prospectively plans for future product. A modest increase in average Duplex subscribers also contributed to the increase in service revenue. Although growth, Duplex subscriber addition were over 22,000 during the last 12 months, growth has been hampered by forced turn of non-paying subscribers and lower equipment sales due to the strategic deployment of our phones. During the past several months, we have focused equipment sales through dealers and into market that results in the higher value customers in order to increase profitability. While this strategy optimizes service revenue, it may result in lower equipment sale and…

Operator

Operator

Jay Monroe

Analyst

Operator, it looks like there are no questions today, so I'd like to close the conversation by thanking everybody for joining and hopefully we will be talking again soon as we finalize the FCC process and have more to talk about in that regard as well as the financial results. Thank you, all, and we look forward to talking to you next quarter.

Operator

Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.